32 CFR 2700.12: Criteria for and level of original classification.
(a) General Policy.
Documents or other material are to be classified only when protecting the national security requires that the information they contain be withheld from public disclosure. Information may not be classified to conceal violations of law, inefficiency, or administrative error, or to prevent embarrassment to a person, organization or agency, or to restrain competition. No material may be classified to limit dissemination, or to prevent or delay public release, unless its classification is consistent with E.O. 12065.
To be eligible for classification, information must meet two requirements:
(1) First, it must deal with one of the criteria set forth in section 1-301 of E.O. 12065;
(2) Second, the President's Personal Representative for Micronesian Status Negotiations or his delegate who has original classification authority must determine that unauthorized disclosure of the information or material can reasonably be expected to cause at least identifiable harm to the national security.
(c) Classification designations.
Only three designations of classification are authorized—“Top Secret,” “Secret,” “Confidential.” No other classification designation is authorized or shall have force.
(d) Unnecessary classification, and classification at a level higher than is necessary, shall be avoided. If there is reasonable doubt as to which designation in section 1-1 of E.O. 12065 is appropriate, or whether information should be classified at all, the less restrictive designation should be used, or the information should not be classified.